Inflationary fears dent rupee; falls to new low of 72.67 per USD

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Last Updated: Tue, Sep 11, 2018 10:54 hrs

Mumbai: Indian rupee tumbled to a new record low of 72.67 against the US dollar on Monday amid expectation of higher overall inflation rate, growing protectionism in global trade and an increasing outflow of foreign funds from the country's equity market.

However, the Indian rupee recovered to settle at 72.45, its new record lowest closing level against the US dollar. It closed Monday's trade weaker by 72 paise than its previous close of 71.73 per greenback at the Inter-Bank Foreign Exchange Market.

"Alleged intervention from RBI (Reserve Bank of India) aided in the recovery of Indian rupee against the USD," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

"Rising oil prices, strong economic data in the US and trade war are causing the weakness in the INR," Banerjee said.

Rushabh Maru -- Research Analyst at Anand Rathi Shares and Stock Brokers said: US non-farm payroll data has posted better than expected reading. This indicates that the US Fed is on track to raise interest rates two more times this year... once in September and the second one could be in December.

Historically, higher interest rates in the US have led foreign institutional investors (FPIs) away from emerging markets such as India.